REAL

Image source: The Motley Fool. Thursday, Aug. 6, 2026 at 5 p.m. ET Senior Director of Investor Relations - Emily Gacka Chief Executive Officer and President - Rati Levesque Chief Financial Officer - Ajay Gopal Need a quote from a Motley Fool analyst? Email [email protected] Operator: Good afternoon, everyone. My name is Kate, and I will be your conference operator today. At this time, I would like to welcome you to the RealReal Second Quarter 2026 Earnings Call. [Operator Instructions] At this time, I would like to turn the call over to Emily Gacka, Senior Director of Investor Relations. Emily Gacka: Thank you, operator. Joining me today to discuss our results for the period ended June 30, 2026, are Chief Executive Officer and President, Rati Levesque; and Chief Financial Officer, Ajay Gopal. Before we begin, I would like to remind you that during today's call, we will make forward-looking statements, which involve known and unknown risks and uncertainties. Our actual results may differ materially from those suggested in such statements. You can find more information about these risks, uncertainties and other factors that could affect our operating results in the company's most recent Form 10-K and subsequent quarterly reports on Form 10-Q. Today's presentation will also include certain non-GAAP financial measures, both historical and forward-looking. We have provided reconciliations for historical non-GAAP financial measures to the most comparable GAAP measures in our earnings press release, which is available on our Investor Relations website. I would now like to turn the call over to Rati Levesque, Chief Executive Officer of The RealReal. Rati Levesque: Good afternoon and thank you for joining us. Q2 was another standout quarter for our business. We delivered GMV of $617 million, an all-time high for TRR, up 22% year-over-year and marking our fourth consecutive quarter of GMV growth above 20%. Revenue grew 17% to $193 million and trailing 12-month active buyers accelerated for the fourth consecutive quarter, up 11% year-over-year. Along with strong top line growth, we also delivered meaningful margin expansion. Adjusted EBITDA margin of 7% was up nearly 300 basis points versus last year. These results reflect the disciplined execution of our strategy. Quarter after quarter, we're up-leveling the customer experience, deepening trust and compounding our advantage. Our buyers are higher quality, our sellers are more engaged and the platform connecting them gets smarter every quarter. Given the strength of what we're seeing, we are confidently raising our full year outlook. The RealReal is a marketplace deliberately designed for the luxury consumer and the way they want to be served. We've developed deep expertise across the full range of luxury, establishing the trust that comes from handling our members' most valued possessions. Every part of our platform from sourcing and authentication to pricing and merchandising is built to deliver an unparalleled service, and it will continue to evolve as our customers do. As the resale market grows, trust is what separates leaders from the rest. We take possession of every item, we authenticate it, and we stand behind our work, a standard most marketplaces structurally cannot match. That's what brought a consignor to us in Q2 with a $2.5 million F.P. Journe watch, and it's the same standard that serves a member discovering luxury for the first time. That full service has enabled us to build the largest authenticated luxury data set in the world. And AI is unlocking the power of that data across pricing, search, authentication and the tools our members use to manage the value of what they own. We've seen where luxury demand is moving in real-time. When demand moves, we're positioned to secure the supply and have the data and pricing intelligence to meet it. Let's discuss the progress we're making against our strategic pillars, starting with our growth playbook. Our sales team sets us apart. We don't wait for supply to come to us. Our people go out and source it, which means our assortment is curated, not accumulated. Year-to-date, supply per sales rep is up 15% versus last year and the relationships they build deepen over time with consignors coming back and bringing more of their closet with them. The same relationships and trust that bring consignors back also bring us new ones through referrals. Our Real Partners program connects us with high-value supply through professionals like stylists and real estate agents who already have the trust of luxury consumers. Sellers referred through our Real Partners program consign 4x the value of our average new consignor. The program demonstrates the network effects in our business, and we see meaningful runway ahead. As we discussed last quarter, we're building an asset-light international supply network. In the second quarter, we onboarded 2 large Japanese vendors onto our dropship program. The success of our sales team, partnerships and our newer supply initiatives is bringing more high-quality supply every quarter. On the marketing side, we are acquiring higher-quality buyers. New buyers up double digits in the second quarter are showing stronger lifetime value and are more likely to turn into consignors, becoming RealRealers and reinforcing our flywheel. In Q2, we launched our Be a RealRealer campaign, putting flywheel messaging at the center of our brand marketing. We're investing in marketing with a healthy balance across brand building and performance channels. We see real opportunity as resale adoption accelerates and younger generations discover luxury through our platform. We are also enriching the product data we share with paid channels, helping search platforms match the right buyer to the right item. These new buyers are spending more on their first purchase. That same depth of data is why we lead when consumers turn to AI to look for pre-owned luxury. Our stores deepen consignor relationships, deliver high-quality supply and build trust in the communities we serve. We are expanding our store footprint strategically in 2026. We look forward to opening our first Boston area store this fall and an additional neighborhood store in the L.A. market, one of our largest and fastest-growing regions. These new stores, along with our San Francisco location, which opened earlier this year, brings our total store count to 20. Going forward, we'll continue to target one to three new stores per year. Turning to our second pillar, obsessed over service. On the buyer side, we recently started testing an AI-powered conversational shopping agent in partnership with Google. We have over one million one-of-a-kind listings and more than 40 million members. So we are always finding ways to make product discovery more intuitive. For example, if you're looking for a dress for a fall wedding in Upstate New York, our agent will deliver a specific and personalized set of results. We're also using AI and our proprietary data to automatically add richer detail to every listing, information like occasion, collection and trend data just to require manual input. This means items are more discoverable, both on and off platform. On the seller side, more than 2/3 of our consignors tell us they prefer a full-service experience. They are looking for a trusted partner who handles everything. This is what our full-service model delivers. You hand us the item, and we do the rest. Every day, we work to make our experience even better, faster and more transparent as well as being easier to engage with. First, our price estimator tool is now built on a centralized AI-powered pricing architecture that gives our sales team and our consignors consistent real-time visibility into the current market value of their items. Our sales team is actively using the tool, and we've launched it in a test for 20% of our consignors. We're also redesigning our digital onboarding for new consignors, removing friction from the seller funnel and making it more conversational from the first interaction. And we continue to build the feature set for MyCloset, the product manifestation of our vision to become the personal adviser of the closet. We're building the system of record for our customers' luxury assets and expect to begin rolling out the broader consumer-facing experience in the coming quarters. Turning to operational excellence. Athena, our AI-enabled intake system, continues to scale, and we remain on track for our year-end target of nearly 50% of items flowing fully through it. We're also starting to process higher-value items that previously required manual handling and attribution. A year in, Athena has shown us there's even more opportunity. We've begun experimenting with its next iteration, extending AI and automation into parts of intake that weren't in the initial phase and removing more manual steps. Ultimately, Athena and our broader technology investments are helping to remove multiple dollars per unit from our processing costs, increasing speed to sell and allowing us to scale with minimal incremental headcount investment. We're delivering growth while continuing to drive operating leverage across the business. Entering the year, we said 2026 would be the year our advantages begin to compound. That statement is starting to become reality. Each part of our platform from authentication and pricing to supply and member experience makes the other stronger. Looking at the broader landscape, we're leading a meaningful shift in how luxury consumers shop. In a recent survey of our customers, over 70% of respondents said that the RealReal elevates their personal style, allowing them to better express who they are. They're prioritizing quality, individuality and lasting value over trend cycles. The RealReal is more than a marketplace. With access to decades of fashion across thousands of designers, we help our customers discover, shop with confidence and maximize the value of their closets. Before I turn the call over to Ajay, I want to thank our team for delivering an exceptional quarter in Q2. Results like this require execution across every part of the business, and I'm incredibly proud of our team. Your dedication continues to raise the bar for how we show up for our consignors and buyers and reinforces my conviction in where we're headed. With that, I'll turn the call over to Ajay. Ajay Gopal: Thank you, Rati. Good afternoon, everyone. I am pleased to review our second quarter results, which demonstrate in the financials what Rati just described. Our strategy is delivering results, and we are beginning to see the compounding effects we've been investing towards. You can see it in the durability of our growth and the operating leverage in our model. Q2 GMV of $617 million increased 22% year-over-year and accelerated to 37% on a 2-year stacked basis. We delivered adjusted EBITDA of $13.5 million or 7% of revenue, expanding 290 basis points year-over-year. Orders increased 8% and average order value grew 13% to $659. Q2 revenue of $193 million increased 17%, with consignment revenue up 15% and direct revenue up 26%, supported by strong supply through the quarter with strength across our sales team, stores and direct channels. Beyond the top line, we saw deeper engagement across the platform. Trailing 12-month active buyers grew 11%, surpassing 1.1 million. We also saw more of our buyers become consignors. In the second quarter, 44% of our new consignors came from our active buyer base, up from 40% just 2 quarters ago. This highlights the strong network effects in our model and is a meaningful driver of long-term growth and profitability. Our second quarter take rate was 35.9%, down 200 basis points year-over-year. As we've discussed, this movement is driven by a favorable shift in product mix. In the first half of 2026, sales of items above $1,000 increased 36% versus last year as buyers increasingly trust us with higher-value items. These items carry a lower take rate percentage but generate more profit dollars per transaction and stronger unit economics. Gross margin expanded 10 basis points to 74.4%. Gross profit of $143 million was up 17% versus last year. Total operating expenses leveraged approximately 470 basis points year-over-year. Excluding stock-based compensation, OpEx leveraged 370 basis points, primarily driven by operations and technology leverage. This reflects the tangible impact of automation and our Athena initiative. As more items flow through our AI-enabled intake system, we are processing more volume with less incremental labor. Excluding stock-based compensation, SG&A also leveraged approximately 110 basis points, reflecting improved productivity and fixed cost discipline as we scale. In the second quarter, we made strategic investments, increasing our spend in both brand and performance marketing. As the leader in an attractive and growing market, we see opportunities to acquire high-quality buyers and consignors and to build more awareness as resale adoption accelerates. We expect to continue with a similar level of investment in the third quarter. Together, this brought adjusted EBITDA above our prior guidance to $13.5 million or 7% of revenue, expanding 290 basis points versus last year. We ended the quarter with $134 million in cash, cash equivalents and restricted cash. Capital expenditures on property and equipment for the quarter were $4 million. We continue to anticipate full year capital expenditures on PP&E to remain within 2% to 3% of total revenue. 2026 investments are concentrated in our operations infrastructure, including our automated storage and retrieval system, which is expected to go live in Q4 and will expand capacity at our Perth Amboy authentication center by 35%. In Q2, we generated $2 million in operating cash flow, an improvement of $5 million year-over-year. Free cash flow improved $9 million versus last year. Looking ahead, we expect to generate strong positive free cash flow in both the third and fourth quarters. Similar to last year, we expect free cash flow to outpace adjusted EBITDA in the second half, demonstrating the favorable cash dynamics of our business model as we scale. Turning to guidance. With the first half complete, continued strength in our supply trends and greater visibility into the balance of the year, we are confidently raising our full year outlook. For the third quarter, we expect GMV of $610 million to $620 million, representing 17% to 19% growth year-over-year; revenue of $194 million to $198 million or 12% to 14% growth and adjusted EBITDA of $13.5 million to $14.5 million. For the full year, we now expect GMV in the range of $2.535 billion to $2.565 billion, representing 19% to 20% growth year-over-year. Revenue is expected to be between $788 million and $797 million, translating to 14% to 15% growth. And adjusted EBITDA is expected in the range of $66 million to $69 million, which represents an 8.5% margin at the midpoint. This is an improvement of approximately 240 basis points versus 2025, and we remain on track to reach our target of 15% to 20% adjusted EBITDA margins over the medium term. In closing, Q2 demonstrates what we've been building toward: durable growth, expanding margins and a flywheel gaining real momentum. We entered the second half from a position of strength. That is a direct result of our team's outstanding execution across the business, and I want to thank them for an excellent quarter. With that, I will turn it over to the operator for questions. Operator: [Operator Instructions] Your first question comes from Irwin Boruchow with Wells Fargo. Irwin Boruchow: Congrats on the quarter. Just 2 for me. Just the revenue guide for the third quarter looks great. There's a lot of chatter out there on retail and just some slowdown we've seen some during the summer. Just can you comment anything quarter-to-date? It doesn't seem like you're seeing any of that but wanted to bring it up. And then, Ajay, I think you mentioned the pull forward of some investments. The flow-through margin on the second quarter was not as high as some of the other quarters. Can you dig into that a little bit more and is that something that we should kind of model for the future? Or is this kind of a onetime initiative? Just more detail on the margins in 2Q and what it means to the back half and go forward. Rati Levesque: Thanks for the question. I'll start, and I'll hand it over to Ajay for the second part of your question. As far as what we're seeing on the platform right now, our consumer continues to be quite resilient. We're all obviously looking at the buyer and supply coming through on the site. Supply continues to be strong, sitting at that intersection like we always say between luxury and value, where if we do see some sort of consumer confidence or that softens, it actually strengthens our case much of the time. So the buyers continue to find their value prop compelling on our platform. And I'd say one other thing that we are seeing, like you know this, but we offer that breadth and data across thousands of designers, and categories and price points. So when this consumer preference shifts, we're able to kind of shift with them pretty quickly. Ajay Gopal: Thanks, Rati. And to your other question on Q2 results, we're pleased with our results in Q2. GMV was up 22%, and we saw that translate to EBITDA of 7%, which was up 290 basis points year-on-year. As you look at that, it is in the range of what we expect to see on our path to delivering 15% to 20% adjusted EBITDA margins over the medium term. You've heard me talk about how we expect to add between 200 to 300 basis points of margin every year. Q2 was in line with that range, and our guidance for the year is also to add about 240 basis points in 2026. Operator: Your next question comes from Bobby Brooks with Northland Capital Markets. Robert Brooks: On the slides, it was called out AI pricing fully launched and one piece of it called out life cycle discounting. But I know you had already had a system in place that automatically cut the price as items aged. So I just wanted to get a little bit more granular on what's new there? Ajay Gopal: Bobby, thank you for the question. So what we are referring to there is really how we've extended our AI-based pricing algorithm to now manage the movement of price from when an item is initially launched on the platform. What we are doing today is slowly expanding coverage of that model to look at many more data points like page views that an item is getting, the number of buyers that are clicking on the obsessed icon when they look at an item. And we use those signals to then modulate the price of the item going forward. It's a lot more precise. Prior to this model, we still had a lot of people that could override that, and we had more merchandising team effort going into this, and now we have more precision into how we move our prices. The net effect, of course, of doing all this is we are able to capture a slightly higher price. We're able to get the best possible price on behalf of our consignors and also make sure that our sell-through rate stays strong. Robert Brooks: Got it. Just a more precise way of doing it is essentially it relying more on data signals. Ajay Gopal: Yes. Yes. Robert Brooks: And then active buyer growth has been strengthened in the last few quarters, and the second quarter was the strongest percentage growth in some time, and that's really impressive when you think of the nominal numbers getting higher. And obviously, a lot of large numbers make those percentage games tougher, but it's not seemingly being an issue for you guys. So if maybe we step back, what in your approach to getting new buyers might have changed over the last couple of quarters that you think is really driving this acceleration? And are there more benefits to come from the strategy? Rati Levesque: Bobby, I'll take this one. Thanks for the question. So a couple of things. We're seeing the flywheel. We talked about the flywheel. That just becomes a more and more important mechanic in our business. And that strategy is gaining real momentum. So we're seeing the strong network effects there. 44% of now our new consignors came from our active buyer base in Q2. So the buyers we're acquiring today are just increasingly becoming consignors, and that's how we're acquiring the buyers in the first place. So just self-reinforcing that loop and what makes our business model so durable and capital efficient at the end of the day. But yes, we surpassed over 1.1 million buyers, growing, I think we said 11% year-over-year. The spend is higher. We're seeing 50% more value come in through them. And then mostly Gen Z and Millennials, those are our fastest-growing segments as well, so younger. And then we're just -- as we think about our marketing messaging and our material, you'll see us looking at messaging that is flywheel. So The RealRealer campaign was something that we launched that had really great conversion as well. Robert Brooks: And if I could just squeeze one more in, you mentioned signing up 2 consignors for the dropship from -- Japanese consignors for the dropshipping. Just would love to hear a little bit more color there. And maybe if you could help frame, is that like kind of the of the 2 really -- 2 large new adds, or have there been prior ads before? Just trying to triangulate that. Rati Levesque: Yes, sure. I'll take that one, Bobby. So I'd say we're making deliberate measured progress on dropship, our kind of way into international. Yes, I talked about in Q2, we onboarded 2 pretty large Japanese vendors onto our dropship program and other significant partners as well in Europe, France and Italy specifically. I believe they have the potential to become some of our larger sellers on the platform. Still really early days. We talked about this year being very much in the test and learn phase. But I'd say the early results are encouraging. And in the medium term, I continue to believe that the opportunity is real. What I like about dropship is that the supply is largely incremental, a supply that wouldn't necessarily come via some of our other consignment channels. And then July marked our highest volume month in dropship. So again, you're seeing strong effects there. So we're excited about that. Operator: Your next question comes from Marvin Fong with U.S. Bancorp BTIG. Marvin Fong: And let me add my congratulations on the great performance. Maybe on AOV, obviously doing really well there. Could you just break that down between ASP and UPT? And just secondarily, it's obviously rising pretty rapidly in value. Do you see any sort of limitations on that as the ASP potentially kind of reaches out the reach of some of your buyer population? Just kind of help us understand how to think about that. Or is it just that luxury in general is just price appreciation there makes it so that they'll still continue to buy on your platform? Ajay Gopal: Thanks for that question, Marvin. We've seen a healthy balance between units and price in our growth rate. In recent quarters, you're right, that balance has indexed more towards price, and we see that being driven primarily by consumers shifting their mix towards more high-value items. I think when you step back from that dynamic, we cover a wide range in the category of luxury fashion, right? We have multiple categories, and we have a wide range of price points. And as a marketplace, we're largely agnostic to any shifts within that mix because our monetization and our unit economics are strong across our assortment. I think it really points to the beauty of our marketplace and how we can quickly move to capitalize on any shifts in trends in luxury fashion. And it's really that flexibility that we would highlight as translating to the durable growth that we've seen in the last few quarters. Marvin Fong: Okay. Great. And my second question, just on the AI shopping assistant. With most platforms, that would be viewed as positive for conversion. But since you guys already have such high sell-through, can you just kind of help us understand how that might benefit your P&L perhaps just by higher consignor satisfaction and faster product velocity? But however you think about it, just help us with how that might manifest itself financially. Rati Levesque: Yes, sure. I'll start, and then Ajay, feel free to add on. So how we're thinking about this is first of all, it's about transforming the customer experience, thinking about where they're headed. In general, for us, just more broadly, we're thinking about optimizing TRR for agentic search, for example, AEO. I'm confident we are keeping pace and moving with the customer in a lot of ways. So you heard us say that we're launching a test around conversational shopping in partnership with Google. That personalized test set of results gets you the most personalized listing and gets it to the buyer even faster. So that could mean less discounting, discoverability, right? So we're using AI automatically to enrich the listing for whether it's occasion, collection, trend data. And so making our inventory more discoverable, both on and off platform. And so looking at conversion to see what that KPI looks like. But to your point, our sell-through is good, but does that mean less discounting when you're getting the product, the right product to the right buyer even faster. Ajay Gopal: Yes. And maybe to add to that in terms of impact to the P&L, right, it is really about conversion. We have over one million items on our website at any given point in time. And tools like conversational search really help that buyer find what they're looking for. You've heard us talk about the strong network effects on our platform. As we bring in more buyers onto the platform through investments in helping demand move quicker, we can then convert them into becoming consignors and increase the LTV that they represent to the RealReal. Operator: Your next question comes from Matt Koranda with ROTH Capital. Unknown Analyst: This is [ Joseph ] on for Matt. Just wanted to see if you guys could touch on guidance here. A pretty big uptick if you look on year-over-year growth trends for GMV versus the prior back half prior comps. Just could you talk about what trends you're seeing either the supply or demand side that gives the team confidence in the second half outlook or if there's any notable consumer behavior changes just given the recent months with geopolitical and market volatility? Ajay Gopal: Yes. Thanks for the question. Q2 was a standout quarter. We delivered an all-time high in GMV. And I think more importantly, it was our fourth consecutive quarter above 20% growth. And as we look at sort of what's behind that growth, I would point to a lot of fundamentals, right? Our supply is strong. Our strategy towards unlocking supply is working well, and we are seeing our advantages compound and drive that growth. Our buyer base is also growing. We reported 11% trailing 12-month buyers, and we are seeing more of those buyers convert into sellers, 44% versus 40% just a couple of quarters ago. As we look at the second half, these trends from Q2 and the fact that we have strong line of sight into Q3 give us the confidence to raise our guidance for the year. And that's why you see us taking it up from a midpoint of 15% growth on GMV to now 20% growth for 2026. Rati Levesque: To add to that a little bit. As far as supply grows and what gives us confidence in the back half of the year, we talk about consignors being our key component for our supply engine. We're seeing the momentum being quite strong there. But what's exciting is that the growth is coming from now multiple channels simultaneously, right? And so they're reinforcing each other. And that's, like I just said, what makes our business so durable. You've got the sales team, our most powerful supply channel. They've got the deep relationships. Supply per sales rep is up 15% per year. And then you've got the professional network through our Real Partners program, which we talked about and their consigned values up 4x per average new consignor. And then you've got the flywheel working as well as some of these other things that we're testing like dropship and then 1/4 of our new consignors coming from stores. So we have the multiple channels working simultaneously just to really unlock more supply and kind of reinforcing each other. Unknown Analyst: Got it. And then just to, I guess, double-click on that. Are there any new channels where you're finding more sellers? And can you guys talk about a little bit more on the flywheel there? I know you touched on it just previously, but just want to see what you're thinking about new channels to supply and if there's anything to note there. Rati Levesque: Yes. So I touched on a couple of them, but to get into a little more information there, again, when we talk about channels, we've got our sales team. They also operate trust in the states, right? They're managing relationships that bring us some of the highest value supply. We've got our professional network through our Real Partners program. So think stylists, real estate agents, closet organizers and others who have already have the trust of luxury consumers, and that's where we're seeing the consign 4x the value of our average new consignor. You've got our flywheel. So now 44% of our new consignors are coming from our active buyer base in Q2. So you see that go up from 40% just a couple of quarters ago. So our marketing team is working hard and being very successful to acquire buyers who are becoming consignors. The retail locations, like I mentioned, this is the in-person relationship that builds and unlocks through the kind of trust and community that we have that really unlocks that high-value product again. And then dropship, we talked about that briefly as well. It's that asset-light way to bring in supply, find jewelry, watches, handbags, some of that higher value, some of them from international partners as well, and we like that because of the incremental value that's coming in through there. And we're also opening a couple of new stores, which we discussed as well. So that will bring our count up to 20 by the end of the year. Operator: Your next question comes from Mark Altschwager with Baird. Mark Altschwager: Curious how you're thinking about luxury manager headcount growth from here? Is the plan to increase the growth there or lean on productivity per manager as the Athena intake kind of takes work off their plate? And relatedly, just what does the ramp curve look like on a new hire? And how much of the high-value supplier that you're winning is coming from your most senior managers versus some of the newer cohort? Rati Levesque: Yes, I can take that one. Thank you for the question. So we plan to grow luxury managers. They grow less than the business does, of course. We're pushing on both things. We're growing the team, but you're also seeing efficiencies come through. And this is some of the things that we talked about agentic on the sales side that we're testing, some of the pricing transparency that we're using smart sales, which we've talked about in the past. So you're seeing more value come in. Supply sales rep is up 15% year-to-date. So you see us doing both kind of onboarding new but also finding efficiencies within the team now. The tenure has also increased pretty significantly. So we're happy about that. You're getting more value there. And then as far as ramp goes, it was a few months, I'd say a year ago. It's come down a lot because of the tools and now training that we have. So I'd give it about 60 days before they're fully ramped. Mark Altschwager: A follow-up for Ajay, we have kind of a modeling nuance here. But the NMV grew a bit faster than the GMV and implying the return rate or the cancellation rate improved year-over-year, I think, close to 100 basis points. What drove that? Is that purely the mix effect that we're seeing with the higher value? Or are there other things going on with better imagery on the site or the pricing accuracy with the AI tools? Just anything more on that return rate and where you see that going? Ajay Gopal: You stole part of my answer there. But yes, we have been working on things to bring down our return rate. Better attribution is key. Better imagery also helps with buyers getting exactly what they're looking for. So those things have been driving, I would say, a modest improvement in our return rate, modest downward improvement in our return rate. In Q2, in particular, there's also a lapping effect from what played out last year. So that's sort of adding to what you called out, which is the growth in NMV for Q2 being stronger than what you would expected. Operator: Your next question comes from Marni Shapiro with The Retail Tracker. Marni Shapiro: Congrats on a great quarter. The site is great. It's a fun place to doom scroll all night. Can you talk a little bit about are people spending more time on the site directionally? Is that going up or down? And a couple of questions even within that. Are you seeing them move from segment to segment, maybe starting in handbags, but moving to dresses or jewelry and things like that? And then I have one more follow-up. Rati Levesque: Yes, sure. Marni, thanks for the question. Yes, so we do see customers more engaged, especially on the app or more than 40 hours a year is what they're spending on the app. We do get that comment quite often where they're scrolling a RealReal versus social media. And so we kind of took a look at that. And what we're seeing is more of those buyers becoming consignors like we talked about. High value is driving a lot of the growth from a lot of our categories. So fine jewelry, watches, handbags, ready-to-wear. And then high value was actually up pretty significantly in the first half of the year. So I'm just even thinking items over $1,000 sold, I think, almost up 40% year-on-year as well. And then we talked a little bit about the Gen Z and Millennials growing and just kind of our fastest-growing segments there. Marni Shapiro: I'm curious, do you have the ability once somebody adds something to obsessions, do you have the ability to market to them to increase conversion because it would seem that would be the easiest place to kind of pick them off for lack of a better word. Do you have the ability to do that? Like what is the conversion rate on obsessions for you guys? Rati Levesque: Yes, for sure. So we can see a lot of that, what the customer is doing, kind of how they're behaving, the views, what they're adding to cart, what they may also like, for example. And this really is, at the end of the day, kind of going from being a transactional -- having a transactional relationship on our marketplace with our customer to more of an emotional or relational one, right? So becoming that personal adviser for our customers' closets through tools like well, you're really kind of hinting at is MyCloset, right? So that price estimator, a seller experience that really deepens over time, the education that we can give them to help them make decisions in the primary market. For example, what is selling well, what is hot, what does hold this resale value, what doesn't. But we're set up really well to do this. We're using AI, we're using data to get smarter every quarter. So you've got 15 years of proprietary data on over 50 million items, powering our pricing, our authentication, search, just the member tools that we have, and we'll continue to evolve this. Operator: Your next question comes from Ashley Owens with KeyBanc Capital Markets. Victoria Apostolico: This is Victoria on for Ashley. I just wanted to double-click on Athena and the AI pricing now. So with Athena on track for 50% by year-end and AI pricing now fully launched, can you just paint a picture of how the platform is getting smarter every quarter? And what changes you're expecting to see with the technology over the balance of the year? I also wanted to ask how it's determining the prices. So if it's looking at a pre-used item versus a dropshipping item in terms of condition, the year, et cetera. Ajay Gopal: Yes. I can take that question. So let me first talk about Athena. So Athena is our proprietary item or it's our AI-powered intake process. And last year, we started from 0, and we ended the year with Athena processing about 35% of our items, and we continue to expand that model to now cover up to 50% of items by the end of this year. It really drives efficiencies. It's a key driver behind operating efficiencies in our ops and tech line. And what's key for us to expand that this year is to extend it from low-value items, which is where we originally built the models to now going into mid-value and high-value items. We see the results as being multiple dollars per unit coming out from processing costs. It also affects speed, speed to sell, which is very valuable for customer satisfaction. On pricing, just to make sure I got your question, our pricing algorithm is being applied to all the items on the site. So it covers consignment, it covers items that are coming from dropship as well. What it does is it looks at over 100 different data points to compute what the price is likely to be. And we use information like what's the item category, what is the history that we have on that. There was a question on obsessions. That's a great input into that, right? We know how many people looked at it as well and what kind of popularity it has. So we use all that information to come up with the pricing. We've been building this algorithm to first focus on launching price, and now it's been extended into managing discounting going forward as well. Victoria Apostolico: And then I just wanted to double-click on the variance between GMV and total revenue. The gap widened this quarter when I think the guide implied that it would be similar or down from 1Q. I just wanted to ask what's changed relative to your expectations in the quarter? And should we still expect this gap to narrow in the second half of the year? Ajay Gopal: Yes. Thanks for that question. So the gap between GMV and revenue growth for us is primarily about take rate. And you heard us talk about how we've seen a favorable shift in mix towards higher-value items. And when we sell more high-value items, those come with a lower percentage take rate, but they have strong unit economics, they generate more profit dollars. I mean to put that in context, you heard Rati talk about how items above $1,000, sales of those items has increased 36% in the first half. That gives you a sense for how that mix is shifting. Our guidance contemplates the relationship in the second half to be similar to what we are seeing right now, and that's what's implied in the go-forward guidance for 2026. Operator: Your next question comes from Jay Sole with UBS. Jay Sole: My question is just about what's your updated thinking on the convertible notes, warrant liability, dilution management and just capital allocation priorities in general as the free cash flow continues to improve? Ajay Gopal: Yes. Thanks for that question. We continue to operate a very cash-efficient business model. And our priority to keep strengthening our balance sheet by deleveraging is still a focus for us. If you look at the last couple of years, we have reduced our total debt by slightly over $80 million, and we will continue to pursue all options to do that going forward. Operator: Your next question comes from Anna Glaessgen with B. Riley Securities. Anna Glaessgen: Just one for me. I wanted to get a little bit more perspective on the growth in above $1,000 items. It sounds like it's a mix of both category as well as mixing up within category. Just any additional perspective would be great. Rati Levesque: Anna, yes, thanks for the question. We're seeing it across the board actually. So fine jewelry, watches, handbags and ready-to-wear, all kind of in that category. I'd say it's driven by some of even the unbranded jewelry that we sell on our site. Operator: Your last question comes from Dylan Carden with William Blair. Dylan Carden: I was curious kind of looking at the guide for the next 2 quarters, it looks like you're into that longer term algorithm you speak to low double-digit top line, 150, 200 basis points of margin improvement. And I'm just wondering, is part of that -- obviously, that's what you've spoken to, but is some of the low-hanging fruit on the efficiency side behind you at this point? Because I kind of hear different things on the body language like there's still a lot ahead from an efficiency standpoint. But should we expect maybe a slower pace of margin improvement as you work towards kind of what you expect structural top line to that extent? Ajay Gopal: Yes. Thank you for the question. Yes, when you think about our path to expanding EBITDA margins to 15% to 20%, we do see our goal as balancing growth with profitability. We want to make sure that we strike the optimal balance between the 2. For us, that represents margin accretion of roughly between 200 to 300 basis points in any given year. Our guidance for this year would imply accretion of 240 basis points, which is right in the middle of that range. We will continue to manage the business to make sure that we're delivering on both fronts, capitalizing the opportunity in front of us, a $250 billion TAM with us being the market leader in this space and making sure that we're flowing more of that down to EBITDA. Dylan Carden: Okay. And then on the marketing efficiency side, I know it's getting better from just the conversion going after more LTV, higher LTV customers. But are you able to toggle in a way to where your capacity to sort of stimulate buyers to become consignors and vice versa? Is that a muscle that you're able to flex more in the market just from the acquisition side? Rati Levesque: Yes. Yes, Dylan. So we are definitely seeing more levers that we can pull on the marketing side. So flywheel and buyers becoming consignors for sure, getting smarter about going out to the right consignors, quality consignors with higher conversion that is going to have that mid- and high-value product. So we're definitely making a deliberate investment here, and we see real opportunity in front of us as resale adoption is accelerating, that younger consumer are discovering luxury or graduating to our platform. When you see that kind of opportunity, we're leaning into that as the ROI is there. Operator: That concludes today's call. You may now disconnect. Before you buy stock in RealReal, consider this: The Motley Fool Stock Advisor analyst team just identified what they believe are the 10 best stocks for investors to buy now… and RealReal wasn’t one of them. The 10 stocks that made the cut are built for long-term growth and could produce monster returns in the coming years. Consider when Netflix made this list on December 17, 2004... if you invested $1,000 at the time of our recommendation, you’d have $400,209!* Or when Nvidia made this list on April 15, 2005... if you invested $1,000 at the time of our recommendation, you’d have $1,375,393!* That performance is why people listen. With a track record of beating the S&P 500 by 4x, Stock Advisor offers a distinct advantage. Don't miss the latest top 10 list, available with Stock Advisor, and join an investing community built for the long haul. See the 10 stocks » *Stock Advisor returns as of August 13, 2026. This article is a transcript of this conference call produced for The Motley Fool. While we strive for our Foolish Best, there may be errors, omissions, or inaccuracies in this transcript. As with all our articles, The Motley Fool does not assume any responsibility for your use of this content, and we strongly encourage you to do your own research, including listening to the call yourself and reading the company's SEC filings. Please see our Terms and Conditions for additional details, including our Obligatory Capitalized Disclaimers of Liability. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy. RealReal (REAL) Q2 2026 Earnings Call Transcript was originally published by The Motley Fool

Interested in The RealReal, Inc.? Here are five stocks we like better. Strong Q2 performance: Gross merchandise value rose 22% year over year to a record $617 million, while revenue increased 17% to $193 million and adjusted EBITDA improved to $13.5 million. Higher-value demand is driving growth: Average order value rose 13% to $659, with sales of items priced above $1,000 up 36% in the first half of 2026. The company is also expanding supply through professional referrals, international dropship partners and new stores. Outlook raised: RealReal increased its full-year GMV forecast to $2.535 billion-$2.565 billion and adjusted EBITDA guidance to $66 million-$69 million, while expecting strong positive free cash flow in the second half of the year. Michael Burry's Alibaba Bet and the Broader Market Implications RealReal (NASDAQ:REAL) reported second-quarter results that included record gross merchandise value and higher profitability, prompting the luxury resale marketplace to raise its full-year outlook. Gross merchandise value, or GMV, rose 22% year over year to an all-time high of $617 million, marking the company’s fourth straight quarter of GMV growth above 20%. Revenue increased 17% to $193 million, while adjusted EBITDA reached $13.5 million, or 7% of revenue, representing a 290-basis-point improvement from a year earlier. → Meta’s Earnings Drop Shows Wall Street Wants More Than Ad Growth eBay Steps Aboard the AI Bandwagon with Certilogo Acquisition “Q2 was another standout quarter for our business,” President and Chief Executive Officer Rati Sahi Levesque said. She cited stronger buyer activity, engaged consignors and margin expansion as evidence that the company’s strategy is gaining momentum. Orders increased 8% in the quarter, while average order value climbed 13% to $659. Chief Financial Officer Ajay Gopal said recent growth has been weighted more toward pricing and higher-value goods, as consumers purchase more expensive luxury items across categories. → 4 Oil and Gas ETF Plays as Prices Stay Sky-High Is This Why Mike Burry Took a Stake in The RealReal Stock? Sales of items priced above $1,000 increased 36% in the first half of 2026 compared with the prior year, according to Gopal. The company said growth in those items was broad-based across fine jewelry, watches, handbags and ready-to-wear apparel, with Levesque also pointing to unbranded jewelry as a contributor. The shift toward higher-value merchandise reduced the company’s take rate by 200 basis points year over year to 35.9%. Gopal said those items generate a lower take-rate percentage but produce more profit dollars per transaction and have stronger unit economics. Gross margin nevertheless expanded 10 basis points to 74.4%, while gross profit rose 17% to $143 million. → Sandisk Just Delivered a Blowout Quarter—Here's Why the Stock Is Falling Trailing 12-month active buyers grew 11% to more than 1.1 million. The company also reported increasing crossover between its buyer and seller bases: 44% of new consignors in the second quarter came from active buyers, compared with 40% two quarters earlier. Levesque said the company is targeting younger consumers, with Gen Z and millennials its fastest-growing customer segments. New buyers were up by double digits during the quarter, she said, and are spending more on their first purchases. The RealReal said its supply strategy is benefiting from several channels, including its luxury-manager sales force, professional referrals, stores and international dropship partnerships. Year-to-date supply per sales representative increased 15% from the prior year. The company’s Real Partners referral program, which works with professionals such as stylists, real estate agents and closet organizers, brought in sellers who consigned four times the value of an average new consignor, according to Levesque. The company also continued building an asset-light international supply network. It onboarded two large Japanese vendors to its dropship program in the second quarter, alongside partners in France and Italy. Levesque characterized the initiative as being in a test-and-learn phase, though she said July was the company’s highest-volume month for dropship activity. The RealReal plans to open its first Boston-area store in the fall and another neighborhood store in the Los Angeles market. Along with a San Francisco location opened earlier this year, the additions are expected to bring the company’s store count to 20. Management said it intends to target one to three new stores annually going forward. Management highlighted artificial intelligence investments in intake processing, pricing, listing enrichment and product search. The company’s Athena AI-enabled intake system is on track to process nearly 50% of items by year-end, up from approximately 35% at the end of 2025. Gopal said Athena initially focused on lower-value merchandise but is expanding to mid- and higher-value items. The system is intended to reduce processing costs by multiple dollars per unit, improve speed to sale and allow the company to handle greater volume with limited incremental headcount. The company also said it has expanded its AI-based pricing algorithm beyond initial list pricing to manage discounts throughout an item’s lifecycle. The model uses more than 100 data points, including product category, historical data, page views and customer “obsession” activity, to determine pricing for consignment and dropship inventory. In addition, The RealReal has begun testing an AI-powered conversational shopping agent in partnership with Google. Levesque said the tool is designed to provide more personalized product results from the company’s inventory of more than 1 million one-of-a-kind listings. Management said better product discovery could support conversion, reduce discounting and improve customer satisfaction. The company ended the quarter with $134 million in cash equivalents and restricted cash. Operating cash flow was $2 million, an improvement of $5 million from the previous year, while free cash flow improved by $9 million. Gopal said the company expects strong positive free cash flow in both the third and fourth quarters. For the third quarter, The RealReal forecast GMV of $610 million to $620 million, representing 17% to 19% year-over-year growth. Revenue is projected at $194 million to $198 million, up 12% to 14%, with adjusted EBITDA expected between $13.5 million and $14.5 million. For the full year, the company raised its GMV outlook to $2.535 billion to $2.565 billion, implying 19% to 20% growth. It expects revenue of $788 million to $797 million, or growth of 14% to 15%, and adjusted EBITDA of $66 million to $69 million. The midpoint implies an adjusted EBITDA margin of 8.5%, approximately 240 basis points above 2025. Management reiterated its medium-term target of adjusted EBITDA margins between 15% and 20%, with Gopal saying the company expects to balance growth investments and profitability while targeting roughly 200 to 300 basis points of annual margin expansion. The RealReal, Inc (NASDAQ: REAL) operates an online marketplace specializing in the authenticated resale of luxury goods. Since its founding in 2011 by entrepreneur Julie Wainwright, the company has positioned itself as a leading platform for consignors and shoppers seeking designer fashion, fine jewelry, watches, art, and home décor. Headquartered in San Francisco, The RealReal combines e-commerce technology with an in-house team of experts to offer a seamless buying and selling experience for secondhand luxury items. At the core of The RealReal's business model is its consignment service, which enables individuals to sell pre-owned luxury products through a fully managed process. This instant news alert was generated by narrative science technology and financial data from MarketBeat in order to provide readers with the fastest reporting and unbiased coverage. Please send any questions or comments about this story to [email protected]. The article "RealReal Q2 Earnings Call Highlights" was originally published by MarketBeat. View MarketBeat's top stocks for August 2026.

For the quarter ended June 2026, The RealReal (REAL) reported revenue of $192.57 million, up 16.6% over the same period last year. EPS came in at -$0.01, compared to -$0.13 in the year-ago quarter. The reported revenue compares to the Zacks Consensus Estimate of $188.04 million, representing a surprise of +2.41%. The company delivered an EPS surprise of +50%, with the consensus EPS estimate being -$0.02. While investors scrutinize revenue and earnings changes year-over-year and how they compare with Wall Street expectations to determine their next move, some key metrics always offer a more accurate picture of a company's financial health. Since these metrics play a crucial role in driving the top- and bottom-line numbers, comparing them with the year-ago numbers and what analysts estimated about them helps investors better project a stock's price performance. Here is how The RealReal performed in the just reported quarter in terms of the metrics most widely monitored and projected by Wall Street analysts: AOV (Average Order Value): $659.00 compared to the $664.50 average estimate based on two analysts. Number of Orders: 937 compared to the 900 average estimate based on two analysts. GMV (Gross Merchandise Value): $617.26 million compared to the $597.5 million average estimate based on two analysts. Revenue- Direct revenue: $25.79 million versus $22.3 million estimated by three analysts on average. Compared to the year-ago quarter, this number represents a +25.8% change. Revenue- Shipping services revenue: $18.57 million versus the two-analyst average estimate of $16.85 million. The reported number represents a year-over-year change of +15.5%. Revenue- Consignment revenue: $148.22 million versus $147.25 million estimated by two analysts on average. Compared to the year-ago quarter, this number represents a +15.2% change. View all Key Company Metrics for The RealReal here>>> Shares of The RealReal have returned +20.8% over the past month versus the Zacks S&P 500 composite's +3.3% change. The stock currently has a Zacks Rank #3 (Hold), indicating that it could perform in line with the broader market in the near term. Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report The RealReal, Inc. (REAL) : Free Stock Analysis Report This article originally published on Zacks Investment Research (zacks.com). Zacks Investment Research

Company Raises Full Year Guidance Following Second Quarter Results Above the High End of Outlook with Record Quarterly GMV and Meaningful Margin Expansion SAN FRANCISCO, Aug. 6, 2026 /PRNewswire/ -- The RealReal, Inc. (Nasdaq: REAL)—the world's largest online marketplace for authenticated, resale luxury goods—today reported financial results for its second quarter ended June 30, 2026. Second quarter 2026 gross merchandise value (GMV) and total revenue increased 22% and 17% compared to the second quarter of 2025, respectively. Consignment revenue grew 15% compared to the prior year period, and Direct Revenue grew 26% year-over-year in the second quarter. During the quarter, gross margin of 74.4% improved 10 basis points compared to the same period in 2025. Second quarter Adjusted EBITDA margin was 7.0%, an increase of 290 basis points versus the prior year period. "The RealReal delivered a standout second quarter, with an all-time high quarterly GMV of $617 million, up 22% year-over-year. That marks our fourth consecutive quarter of GMV growth above 20%. Revenue grew 17% and we delivered nearly 300 basis points of Adjusted EBITDA margin expansion versus last year," said Rati Levesque, Chief Executive Officer of The RealReal. "We're upleveling the customer experience, deepening trust and compounding our advantages. Our buyers are spending more, our sellers are more engaged, and the platform connecting them gets smarter every quarter." Levesque continued, "Entering the year, we said 2026 would be the year our advantages begin to compound, and we're delivering on that commitment. Given the continued strength in our supply trends and the durability of our growth, we are confidently raising our full-year outlook. We are entering the second half of the year from a position of strength, with a flywheel that is gaining real momentum." Second Quarter Highlights GMV was $617 million, an increase of 22% compared to the same period in 2025 Total Revenue was $193 million, an increase of 17% compared to the same period in 2025 Gross Profit was $143 million, an increase of $21 million compared to the same period in 2025 Gross Margin was 74.4%, an increase of 10 basis points compared to the same period in 2025 Net Loss was $(27) million or (14.1)% of total revenue, compared to $(11) million or (6.9)% of total revenue in the same period in 2025. Second Quarter 2026 Net Loss includes a $(18.6) million non-cash adjustment as a result of the change in fair value of warrant liability. Adjusted EBITDA was $13.5 million or 7.0% of total revenue compared to $6.8 million or 4.1% of total revenue in the same period in 2025 GAAP basic net loss per share was $(0.23) compared to $(0.10) in the prior year period and GAAP diluted net loss per share was $(0.23) compared to $(0.13) in the prior year period Non-GAAP basic and diluted net loss attributable to common stockholders per share was $(0.01) compared to $(0.06) in the prior year period Top-line-related Metrics Q3 and Full Year 2026 GuidanceBased on market conditions as of August 6, 2026, we are raising our full year guidance. Additionally, we are providing guidance for third quarter 2026 GMV, Total Revenue and Adjusted EBITDA, which is a Non-GAAP financial measure. We have not reconciled forward-looking Adjusted EBITDA to net income (loss), the most directly comparable GAAP measure, because we cannot predict with reasonable certainty the ultimate outcome of certain components of such reconciliations including payroll tax expense on employee stock transactions that are not within our control, or other components that may arise, without unreasonable effort. For these reasons, we are unable to assess the probable significance of the unavailable information, which could materially impact the amount of future net income (loss). Webcast and Conference CallThe RealReal will host a conference call to review the company's second quarter results beginning at approximately 2:00 p.m. Pacific Time today (5:00 p.m. Eastern Time). A live webcast of the conference call and accompanying materials will be available online at investor.therealreal.com. A replay of the webcast will be available at the same location. To access the conference please register using this link:https://the-realreal-earnings-call-q2-2026.open-exchange.net/registration. About The RealReal, Inc. The RealReal is the world's largest online marketplace for authenticated, resale luxury goods, trusted by more than 40 million members. Our full-service consignment model—offering virtual appointments, in-home pickup, drop-off, and direct shipping—enables consumers to buy and sell luxury across fashion, fine jewelry and watches, art, and home categories with ease. The company combines a rigorous, expert-led authentication process with proprietary technology, including AI and machine learning, to power optimal pricing and processing for our members and to help scale the business. By extending the life of millions of luxury goods, the company is leading a more circular economy, all the while delivering a seamless experience for buyers and sellers. Forward Looking StatementsThis press release contains forward-looking statements relating to, among other things, the future performance of The RealReal that are based on the company's current expectations, forecasts and assumptions and involve risks and uncertainties. In some cases, you can identify forward-looking statements by terminology such as "may," "will," "should," "could," "expect," "plan," "anticipate," "target," "contemplate," "project," "believe," "estimate," "predict," "intend," "potential," "continue," "ongoing" or the negative of these terms or other comparable terminology. These statements include, but are not limited to, statements about future operating and financial results, including our strategies, plans, commitments, objectives and goals, in particular in the context of the recent geopolitical events, and uncertainty surrounding macro-economic trends, financial guidance, anticipated growth in 2026, the anticipated impact of generative AI, and financial targets, goals and projections. Actual results could differ materially from those predicted or implied and reported results should not be considered as an indication of future performance. Other factors that could cause or contribute to such differences include, but are not limited to, inflation, macroeconomic uncertainty, geopolitical instability, any failure to generate a supply of consigned goods, pricing pressure on the consignment market resulting from discounting in the market for new goods, failure to efficiently and effectively operate our merchandising and fulfillment operations, labor shortages and other reasons. More information about factors that could affect the company's operating results is included under the captions "Risk Factors" and "Management's Discussion and Analysis of Financial Condition and Results of Operations" in the company's most recent Annual Report on Form 10-K for the year ended December 31, 2025 and subsequent Quarterly Reports on Form 10-Q, copies of which may be obtained by visiting the company's Investor Relations website at https://investor.therealreal.com or the SEC's website at www.sec.gov. Undue reliance should not be placed on the forward-looking statements in this press release, which are based on information available to the company on the date hereof. The company assumes no obligation to update such statements. Non-GAAP Financial MeasuresTo supplement our unaudited and condensed financial statements presented in accordance with generally accepted accounting principles ("GAAP"), this earnings release and the accompanying tables and the related earnings conference call contain certain non-GAAP financial measures, including Adjusted EBITDA, Adjusted EBITDA as a percentage of total revenue ("Adjusted EBITDA Margin"), free cash flow, non-GAAP net loss attributable to common stockholders, and non-GAAP net loss per share attributable to common stockholders, basic and diluted. We have provided a reconciliation of these non-GAAP financial measures to the most directly comparable GAAP financial measures in this earnings release. We do not, nor do we suggest that investors should, consider such non-GAAP financial measures in isolation from, or as a substitute for, financial information prepared in accordance with GAAP. Investors should also note that non-GAAP financial measures we use may not be the same non-GAAP financial measures, and may not be calculated in the same manner, as that of other companies, including other companies in our industry. Adjusted EBITDA is a key performance measure that our management uses to assess our operating performance. Because Adjusted EBITDA facilitates internal comparisons of our historical operating performance on a more consistent basis, we use this measure as an overall assessment of our performance, to evaluate the effectiveness of our business strategies and for business planning purposes. Adjusted EBITDA may not be comparable to similarly titled metrics of other companies. We calculate Adjusted EBITDA as net income (loss) before interest income, interest expense, provision (benefit) for income taxes, depreciation and amortization, further adjusted to exclude stock-based compensation, employer payroll tax expense on employee stock transactions, gain on extinguishment of debt, change in fair value of warrant liabilities and certain one-time expenses. The employer payroll tax expense related to employee stock transactions are tied to the vesting or exercise of underlying equity awards and the price of our common stock at the time of vesting, which may vary from period to period independent of the operating performance of our business. Adjusted EBITDA has certain limitations as the measure excludes the impact of certain expenses that are included in our statements of operations that are necessary to run our business and should not be considered as an alternative to net income (loss) or any other measure of financial performance calculated and presented in accordance with GAAP. In particular, the exclusion of certain expenses in calculating Adjusted EBITDA and Adjusted EBITDA Margin facilitates operating performance comparisons on a period-to-period basis and, in the case of exclusion of the impact of stock-based compensation and the related employer payroll tax expense on employee stock transactions, excludes an item that we do not consider to be indicative of our core operating performance. Investors should, however, understand that stock-based compensation and the related employer payroll tax expense will be a significant recurring expense in our business and an important part of the compensation provided to our employees. Accordingly, we believe that Adjusted EBITDA and Adjusted EBITDA Margin provide useful information to investors and others in understanding and evaluating our operating results in the same manner as our management and board of directors. Free cash flow is a non-GAAP financial measure that is calculated as net cash (used in) provided by operating activities less net cash used to purchase property and equipment and capitalized proprietary software development costs. We believe free cash flow is an important indicator of our business performance, as it measures the amount of cash we generate. Accordingly, we believe that free cash flow provides useful information to investors and others in understanding and evaluating our operating results in the same manner as our management. Non-GAAP net loss per share attributable to common stockholders, basic and diluted is a non-GAAP financial measure that is calculated as GAAP net loss plus stock-based compensation expense, provision (benefit) for income taxes, payroll tax expense on employee stock transactions, gain on extinguishment of debt, change in fair value of warrant liabilities and certain one-time expenses divided by weighted average shares outstanding. We believe that making these adjustments before calculating per share amounts for all periods presented provides a more meaningful comparison between our operating results from period to period. View original content to download multimedia:https://www.prnewswire.com/news-releases/the-realreal-announces-second-quarter-2026-results-302845414.html

One of the biggest stories of last week was how The RealReal, Inc. (NASDAQ:REAL) shares plunged 20% in the week since its latest quarterly results, closing yesterday at US$10.26. It looks like a credible result overall - although revenues of US$190m were what the analysts expected, RealReal surprised by delivering a statutory profit of US$0.33 per share, instead of the previously forecast loss. Following the result, the analysts have updated their earnings model, and it would be good to know whether they think there's been a strong change in the company's prospects, or if it's business as usual. We've gathered the most recent statutory forecasts to see whether the analysts have changed their earnings models, following these results. This technology could replace computers: discover the 20 stocks are working to make quantum computing a reality. Following the latest results, RealReal's nine analysts are now forecasting revenues of US$780.6m in 2026. This would be a notable 8.0% improvement in revenue compared to the last 12 months. RealReal is also expected to turn profitable, with statutory earnings of US$0.16 per share. Before this latest report, the consensus had been expecting revenues of US$777.0m and US$0.20 per share in losses. Although we saw no serious change to the revenue outlook, the analysts have definitely increased their earnings estimates, estimating a profit next year, compared to previous forecasts of a loss. So it seems like the consensus has become substantially more bullish on RealReal. View our latest analysis for RealReal The average the analysts price target fell 5.2% to US$17.25, suggesting thatthe analysts have other concerns, and the improved earnings per share outlook was not enough to allay them. That's not the only conclusion we can draw from this data however, as some investors also like to consider the spread in estimates when evaluating analyst price targets. Currently, the most bullish analyst values RealReal at US$20.00 per share, while the most bearish prices it at US$13.00. There are definitely some different views on the stock, but the range of estimates is not wide enough as to imply that the situation is unforecastable, in our view. Of course, another way to look at these forecasts is to place them into context against the industry itself. We can infer from the latest estimates that forecasts expect a continuation of RealReal'shistorical trends, as the 11% annualised revenue growth to the end of 2026 is roughly in line with the 9.9% annual growth over the past five years. Compare this with the broader industry, which analyst estimates (in aggregate) suggest will see revenues grow 6.3% annually. So it's pretty clear that RealReal is forecast to grow substantially faster than its industry. The most important thing to take away is that there's been a clear step-change in belief around the business' prospects, with the analysts now expecting RealReal to become profitable next year. Happily, there were no major changes to revenue forecasts, with the business still expected to grow faster than the wider industry. Furthermore, the analysts also cut their price targets, suggesting that the latest news has led to greater pessimism about the intrinsic value of the business. With that in mind, we wouldn't be too quick to come to a conclusion on RealReal. Long-term earnings power is much more important than next year's profits. At Simply Wall St, we have a full range of analyst estimates for RealReal going out to 2028, and you can see them free on our platform here.. It is also worth noting that we have found 3 warning signs for RealReal (1 can't be ignored!) that you need to take into consideration. Have feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email editorial-team (at) simplywallst.com. This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.

Image source: The Motley Fool. Thursday, May 7, 2026 at 5 p.m. ET President and Chief Operating Officer — Rati Levesque Chief Financial Officer — Ajay Gopal Operator Need a quote from a Motley Fool analyst? Email [email protected] Rati Levesque: Good afternoon, and thank you for joining us on today's call. Q1 demonstrated the strength of our platform as our financial and operating results exceeded expectations. I'm very proud of the team's execution during the quarter. Q1 was our fourth consecutive quarter of double-digit top line growth and our third consecutive quarter of growth exceeding 20%. We also expanded adjusted EBITDA margin by over 400 basis points year-over-year. Trailing 12-month active buyers grew double digits year-over-year, which reflects higher levels of trust and an acceleration in engagement with our platform. I want to take a step back to provide perspective on where we've been, where we are and where we're headed. 2024 was about stabilization. We defined our strategic direction and got to work executing against it. We stabilized operations, improved unit economics and validated our transformation. 2025 was about optimization. Last year, we articulated our growth playbook and go-to-market engine to unlock supply and drive profitable growth. The results validated our approach. We surpassed $2 billion in GMV, accelerated top line and delivered positive adjusted EBITDA in every quarter. 2026 and beyond is about compounding. We've laid a solid foundation and the mechanics are working. Now our customer relationships, our data, our brand and our scale are reinforcing each other, each one making the next stronger, compounding our advantages. We've become the barometer of the luxury industry. We capture luxury demand in real time. The categories, brands and looks trending on our platform are often the earliest signal of where the market is moving. Our customers come to us first to see what's trending, what their items are worth and where fashion is heading. A customer's relationship with TRR begins before the transaction and continues long after it. When you consider that about 50% of our customer base is Gen Z and millennial, it's clear that resale is not a passing trend. It's a core component of the future of luxury. And with 47% of luxury consumers considering resale value when purchasing in the primary market, we're changing how people shop. Our business helped to drive this shift. We've created a full-service managed marketplace with the authentication, logistics and trust luxury requires. By modernizing how consumers think about fashion and the value of their closet, we're cementing the operating system for luxury ownership. We are leaning into this vision through three strategic pillars. First, our growth playbook, which is how we unlock supply and drive flywheel behavior as we become the default luxury resale destination; second, obsessing over service, which informs our mindset in every customer interaction and turns transactions into relationships; and third, operational excellence, which is how we use AI, automation and data to improve unit economics and enable scale. Our first pillar is our growth playbook and the mechanics are working. Our sales team remains a key competitive asset. We are actively deepening our moat, empowering our sales team to act as trusted advisers, helping to manage our consignor's closet. Our algorithmic pricing tools equip our sales team with data-driven earnings estimates, giving consignors clarity and confidence. In a brand-forward marketplace, this trust deepens engagement and loyalty, which keeps consignors coming back. We're also extending the reach of our sales team through our referral programs. With the Real Partners program, we're building a network of stylists, closet organizers and real estate agents, the professionals' closest luxury closets who refer their clients to TRR and earn commission. It's an efficient way to reach high-value consignors, and we see significant long-term potential to expand our partner base. Turning to stores. Our stores continue to deepen the consignor relationship, and we're excited about the new markets we're adding for 2026 in San Francisco and Boston. Stores play an important role in generating supply. Sellers who engage with the store deliver 40% more value. In terms of newer supply channels, our drop-ship and vendor channels are expanding. We're building an asset-light international supply network and starting to develop a partner base in places like Italy, France and Japan. Building on our success with drop-ship in the U.S., we see significant runway to grow this channel over the medium term. These supply strategies are successfully driving the compounding mechanics of our platform and accelerating our network effects. As buyers become consignors, our flywheel spins. These flywheelers, whom we affectionately refer to as RealRealers, spend 50% more time with us than the average customer and the flywheel accelerates. The next strategic pillar, obsessing over service, propels the growth playbook forward. Service and data insights for both sellers and buyers helps turn a one-time transaction into a relationship. The full MyCloset suite is the product manifestation of our vision to become the personal adviser to the closet, creating the system of record for our customers' luxury assets. MyCloset will provide real-time estimated value, price tracking and trend intelligence. This further removes friction for the seller and engages customers beyond the transaction. On the buyer experience, our product road map includes AI recommendations in the near term, followed by enhancements in search and discovery. Every item on our platform is unique, which makes agentic and conversational search powerful, and we're excited to continue rolling out features in 2026. Through our growth playbook and obsessing over service, we are building the infrastructure layer for luxury and efficiently connecting buyers to consignors. Our third pillar, operational excellence drives profitability and scalability. Our AI-enabled intake system, Athena, is automating the repetitive data-driven parts of intake, freeing up our experts to focus on the valuable work that requires specialized expertise and judgment. We're targeting to end 2026 with nearly 50% of items fully flowing through Athena, improving processing times, speed to site and our unit economics. Beyond intake, our pricing strategy is also getting smarter, building on our foundation of structured market signals to inform pricing, we've recently introduced AI-powered image embedding. By incorporating image data, our models better account for visual characteristics when determining market value. These visual details give us better comparables to price against and help maximize earnings for our consignors. Later this year, we're rolling out an automated storage and retrieval system at our Perth Amboy authentication center, adding automation and increasing our capacity by 35%. This lets us efficiently handle growing volume at higher speeds without opening additional warehouses, more throughput in the same footprint. Together, these 3 strategic pillars are compounding our advantages and extending our leadership position in the growing luxury resale market. None of this is possible without our consignors. Over the past 15 years, we've paid out more than $6 billion to our consignors, who trust us with pieces that carry real meaning and real value. I also want to sincerely thank our team. None of this happens without you. Together, we built a strong foundation, and I'm excited about where we're headed next. I will now turn the call over to Ajay. Ajay Gopal: Thank you, Rati. Good afternoon, everyone. I am pleased to review our financial results for the first quarter of 2026, which demonstrate a powerful start to the year and the continued disciplined execution of our strategic pillars. We are helping customers view their closets as an asset class, and The RealReal is the trusted destination to manage and monetize those assets. In Q1, we delivered robust top line growth with GMV increasing 24% and revenue up 19% year-over-year. Beyond the headline numbers, we saw deeper engagement with our platform. In Q1, 43% of our new consignors came from our active buyer base. These flywheelers or RealRealers, as Rati mentioned, enhance our network effects and are an important driver of our long-term growth. Our approach to unlocking high-quality supply, combined with our focus on operational efficiency is yielding results. In Q1, we achieved adjusted EBITDA of $13.1 million or 6.9% of total revenue and expanded our margins by 430 basis points, which showcases our ability to drive operating leverage. Now turning to our detailed first quarter results, beginning with top line. Q1 GMV of $606 million increased 24% compared to last year. On a 2-year stacked basis, GMV was up 32%. Q1 total revenue of $190 million increased 19% year-over-year. Consignment revenue grew 18% and direct revenue increased 26% compared to Q1 of 2025. Buyer engagement accelerated with trailing 12-month active buyers up 10% year-over-year. Average order value of $646 increased 15% versus last year. Q1 take rate of 36.4% declined 220 basis points year-over-year. This was due to a favorable mix into higher-value items. As we've explained before, these items carry a lower percentage take rate while generating more profit dollars and improved unit economics. On margins and profitability, first quarter gross profit of $141 million increased 18% year-over-year. Gross margin of 74.5% decreased 50 basis points compared to the prior year, driven primarily by the mix of products sold. First quarter operating expenses leveraged 730 basis points year-over-year as a percent of revenue. The improvement was driven by operating efficiencies and volume leverage on fixed costs. As we continue to scale Athena, outbound automation and other productivity initiatives, we are driving operating leverage. First quarter adjusted EBITDA was $13.1 million, an increase of $9 million versus the prior year and 6.9% of total revenue, an increase of 430 basis points year-over-year. Moving to the balance sheet and cash flow. We ended the quarter with $139 million in cash, cash equivalents and restricted cash. Our operating cash flow in the first quarter was negative $16.6 million, $11.7 million improvement year-over-year. As a reminder, our cash flow is influenced by seasonal factors and similar to prior years, we expect our cash flow to be back half weighted. Moving to our financial outlook. Based on our strong performance, we are increasing our full year outlook and providing guidance for the second quarter of 2026. We are raising full year GMV to the range of $2.42 billion to $2.47 billion, representing 14% to 16% growth year-over-year. Revenue is expected to be between $770 million to $784 million, translating to 11% to 13% growth versus last year. Adjusted EBITDA is expected in the range of $59 million to $67 million, which represents 8.1% margin at the midpoint. This is an improvement of approximately 200 basis points versus 2025, and we remain on track to reach our target of 15% to 20% adjusted EBITDA margins over the medium term. Moving to our outlook for the second quarter. We expect GMV in the range of $590 million to $600 million, representing 17% to 19% growth year-over-year and 32% on a 2-year basis at the midpoint. Revenue is expected to be between $186 million to $189 million, representing 13% to 14% growth versus last year. Second quarter adjusted EBITDA is expected to be between $11 million and $12 million, representing 6.1% margin at the midpoint and approximately 200 basis points of margin expansion year-over-year. In closing, our performance is evidence that our strategy is working. We are driving top line growth while strategic investments in AI and automation are enabling us to expand margins over time. Each year, over 35 million buyers purchase luxury goods in the U.S. primary market and resale adoption is growing. We are helping to drive that adoption through our unique approach to unlocking supply, removing friction for our sellers and accelerating the flywheel. I want to extend my gratitude to our entire team for their hard work and execution to start the year. With that, we will move to Q&A. Operator? Operator: [Operator Instructions] Our first question will come from Marvin Fong with BTIG. Marvin Fong: Congratulations on the strong results. I guess I'd like to just kind of start -- I mean, obviously, we can see your guidance is calling for fairly consistent growth on a 2-year basis for GMV. But just in light of the Middle East conflict and surging fuel prices, just both on the demand and the supply side, is there anything to call out shifting product mix on buyer demand and on the supply side, might you be seeing any incremental supply coming your way as consumers try to cope with the cost of living? Rati Levesque: Thanks, Marvin. Thanks for the question. A couple of things. So I'm hearing what is kind of our confidence in the full year. This is now our fourth consecutive quarter of double-digit growth. We're seeing the customer, both buyer and consignor being quite resilient actually, and that continues. That trend continues. Our value props are resonating with our customer. And I think at the end of the day, it's that intersection between value and luxury that we can offer. So when value of dollar becomes top of mind for our customer, that's kind of where we are. And we, of course, have that higher income customer profile as well. Our supply looks quite healthy, all driven from our growth playbook that we talk about, retail becoming mainstream, but also this flywheel. So you saw an acceleration in our buyers and those buyers becoming sellers. So the top of funnel metrics were focused more of our marketing dollar and top of funnel, but also around our social channels working, and really driven by mostly Gen Z and millennials. So continuing to build trust with our sellers and continuing to see kind of the top of funnel metrics be quite healthy. Marvin Fong: Got it. And if I could do a follow-up, just obviously, we saw the surge in AOV and consumers clearly are shopping your higher-end items. Just why do you believe that's happening? And how sustainable is that trend, I mean, considering, theoretically, the consumer is a bit stressed here, but you guys continue to outperform in handbags, jewelry and those types of items, it sounds like. So just any thoughts on how sustainable that trend is? Ajay Gopal: Thanks for the question, Marvin. We've seen a healthy balance between price and volume in our -- over the last few quarters that's been driving our growth. I think the shift to AOV is it's a testament to the trust that we've built in our platform and the willingness that customers demonstrate on being interested in coming to The RealReal for high-value product. For us, what's exciting, it really showcases the flexibility of our marketplace, right? As customer preferences shift from one category of fashion to another, we are able to quickly pivot and meet them and get them exactly what they're looking for. Operator: Your next question will come from Dylan Carden with William Blair. Dylan Carden: I hope that worked. Curious, you're seeing this really nice balance between customers and AOV. And I'm just kind of curious how you're thinking about that through the balance of the year. And then on marketing and sort of customer acquisition, it seems you speak to flywheel and this idea of compounding. And I'm just curious if there's sort of also a healthy repeat trend in this business where you're out there acquiring either sellers or buyers and part of what you're seeing, particularly on sort of the order side or the order value side is sort of return of some of the efforts that you made in the last sort of 2 or 3 years. Ajay Gopal: Yes. Dylan, thanks for that question. Yes, we are seeing a nice mix of customer growth and sort of their willingness to buy higher-priced items. In Q1, we reported an acceleration in active buyers, which came in at 10% on a trailing 12-month basis. And we've seen a lot of success in mixing -- in shifting the mix of our products into higher value and capitalizing on that opportunity. I'm going to turn it over to Rati for the other part of the question around flywheelers because it's a really exciting story there. Rati Levesque: Yes. So with the flywheelers, you've heard us talk a lot about that, and our strategy there is working. So we've seen acceleration in buyers, but it's not just about bringing in any buyers. It's bringing in the buyers that are sticky but also turn into consignors. So as retail is becoming more mainstream, we can kind of target the right flywheelers and bring them into our ecosystem. And again, that's more driven out of Gen Z and millennials. So our marketing investment has very much been focused around that. They have a high confidence in our ROI, and then obviously, leveraging AI through our smart engine and more targeted offers as well. And you hear me talk about social, but also things like our affiliate program and referrals are our fastest-growing segments. And so we're optimistic in our investment here in focus. Dylan Carden: Would further retail expansion be a piece of that going forward? Could you accelerate stores? Do you need to accelerate stores? Rati Levesque: Stores is always a part of our strategy, our retail locations, and that's the buzzwords, you always hear me talk about the growth playbook, but that's a part of the strategy. It's marketing. It's our sales engine, the IP of our sales team and the retail location. So that trifecta really working together compounds our growth rate and compound supply. Operator: Your next question will come from Ike Boruchow with Wells Fargo. Irwin Boruchow: I guess maybe Ajay, I'm trying to think about how the flow of the model should move from here. I understand what's going on with AOV and take rate. I think you had said 3 months ago, take rate should be pressured in the first half and normalize in the back half. Can you kind of give us some specifics on how you're expecting that to flow? And then kind of a similar question on the direct side of the business, I think up 26%. Like does that growth rate moderate further as you move through the year? Just kind of curious on those two line items, how we should be thinking about the model? Ajay Gopal: Absolutely. Thanks for the question, Ike. So maybe starting with take rate, our blended take rate in Q1 was 36%. And just as you pointed out, and we'd mentioned earlier, right, we do expect pressure on our take rate just from the shift in the mix, right? We -- our take rate is designed in such a way that it gives us strong unit economics across a pretty wide price band. And as we mix into higher-value items, the percentage is a little lower, but those items generate better unit economics and stronger profit dollars. So a good trade-off for us at the business. We expect that to continue, as you can read into our Q2 guidance. And we do expect that to sort of start to -- those two lines to get a little closer as we get into the second half. That's our expectation. But at the end of the day, like I said earlier, it really depends on where the market preference shifts and our ability to be able to capitalize on that shift in real time. The direct revenues, we've made some changes to direct revenue last year. We really looked -- took a hard look at the mix of what was in there and improved the margins as well. So in Q1, it grew 26%, slightly higher than the aggregate business, but not by much, right? Because GMV was up 24% for the total business and direct revenues grew 26%. So we think it's in a good place right now. It will scale with the business, and we expect it to be in that range of 10% to 15% of total revenues going forward. Operator: Your next question will come from Bobby Brooks with Northland Capital Markets. Robert Brooks: So obviously, you're seeing excellent buyer growth in the Gen Z and millennial cohorts. But I was curious, is that the same from the consignor growth point of view? I think that a bigger piece of that supply that you guys talk about or kind of we all know that is just sitting in people's closets, collecting dust are probably more towards the Gen Xers and even maybe baby boomers. And maybe the consignor growth matches the generation mix of the buyer growth. And if that is the case today, could you just discuss your approach to winning the consignors and buyers from that older demographic? Rati Levesque: Yes. Thanks for the question, Bobby. So actually, many -- like I said, many of our new consignors come from our buyer population. And those trends and patterns, we have not seen change. They may be a little more diverse on the supply side, but still driven by millennials and Gen Z as well. As far as tactics specifically to bring on the flywheelers, like I mentioned, reconsign is a big one. So MyCloset, you heard me talk about that a little bit, but this one-click reconsign button to get people to consign as first-time consignors before we know when they bought a handbag, for example. And 6 months later, they're ready to consign it. How do we give them the right signals and how do we personalize our offerings to bring them on as consignment. That's really working. Pricing estimators are really working, leveraging our sales team is all really working, giving them the base of consignors to go after our leads and opportunities is also really working. So all of that kind of together, along with our retail locations is bringing on the supply, but also in this kind of those same cohorts as the buyer, very similar to the same cohorts as buyers. Robert Brooks: Got it. And then just mention building this international pipeline of supply, and I think you specifically called out France and Italy. I just want to unpack that a little. Is that with the kind of individual consignors that you guys -- are currently your bread and butter in the U.S.? Or is that working with brands directly or manufacturers directly? Just really curious to hear more there. Rati Levesque: Yes. So drop-ship, it still continues to be early days here. We continue to learn. I will say it's meaningful growth rate, but not what's driving the growth. So yes, directly able to unlock supply from international vendors or partners like we talked about in the opening remarks. This enables us to kind of test and learn as we think about a more localized approach to international. So we're kind of taking this crawl, walk, run approach. We're launching cross-border this year, again, focus on demand there with the idea that we're focused on drop-ship and bringing on some of these international partners that way, looking to see what kind of product we can get from some of these international partners look like, what does the sell-through look like? Before we kind of move into a broader, more localized strategy. The opportunity here is huge. As we know, the TAM is really big, and we're excited about the next steps here. Robert Brooks: Got it. And then just one last one for me. So the implied revenue guide, a little bit of a decel comparatively to 1Q, but 1Q had the easier comp with the California fires from last year, right? And it seems -- it just seems like listening to the commentary and the tone that things are really accelerating for the business and maybe that year-over-year 2Q revenue guide at face value doesn't really express that fully. So I was just curious to hear your thoughts on kind of my line of thinking there. And maybe if I am right, could you just expand a little bit more like below the numbers on the acceleration or momentum that you're seeing in the business? Ajay Gopal: Thanks for that question. I can take that one. So Q1 was really strong. GMV was up 24%, and it was also our fourth consecutive quarter of accelerating GMV. When we look at what's driving that strength and what's driving that performance, it's a lot of the fundamentals, right? We are -- it's the growing interest in resale as a category. It's our ability through our strategic initiatives to unlock supply and bring that supply on to a high-trust marketplace. And we're seeing that translate into strong growth of the business, attracting more buyers, which also came in at a nice 10% growth on an active basis. So when we look at Q2, all of those fundamentals continue to be true, right? We have high confidence in the guide that we've provided. We're starting the quarter strong. And when I -- it gives that confidence also translates into the full year guide where we've increased the midpoint of our guidance from 13.5% GMV growth to 15% GMV growth. So we'll keep executing and delivering against that plan. Operator: Your next question will come from Matt Koranda with ROTH Capital. Matt Koranda: A lot of the demand stuff has been covered, but I wanted to dig a little bit more into the O&T expense. You leveraged that nicely in the quarter. But I guess on a per order basis, it was kind of flattish. As Athena penetrates further into the business later this year, I guess, how should we be thinking about per order sort of O&T expense and whether we get leverage later in the year? Ajay Gopal: Yes. Thank you for that question. Operations and tech was a significant source of operating leverage for us. It has been -- it was true in last year when it leveraged 330 basis points. And in Q1, it drove 320 basis points of leverage. We think it continues to be a source of where our margin expansion is going to come from. When you look at our full year expectation to expand EBITDA by 200 basis points as we balance our expanding margins with delivering growth, ops and tech will continue to be a key component of that margin expansion. Matt Koranda: Okay. And then just philosophically, if you get upside from efficiency around Athena implementation, is that -- are those dollars that you would consider reinvesting in marketing to speed up customer acquisition? Or is that something you'd let flow to the bottom line? Maybe just a little bit on your thought process around how you think about upside as you implement Athena? Ajay Gopal: Yes. Great question. I mean we love that question. Definitely see it being reinvested back into growth, right? We are -- you've seen us put more money into marketing as we are able to gain more confidence on the return against that spend. The ROI is definitely there. We're also excited to invest a little in product and technology. There's been some very impressive gains in the world of artificial intelligence. And we see an opportunity to translate those gains in AI into our business model. So we will continue to lean into things that drive growth and balance that with expanding margins. I think we are set up to do both. Operator: Your next question will come from Mark Altschwager with Baird. Mark Altschwager: I just wanted to ask about the supply pipeline, watches, jewelry, handbags, that's really been the AOV story for a few quarters now. Can you talk us through the supply visibility as you look 6, 12 months out? I mean, are you seeing any signs of tightening in those particular categories? Or is it still feeling pretty robust there? And then relatedly, Ajay, just bringing it back to the model, we do begin to cycle the step-up in AOV from last year. I think the revenue guide seems to imply some moderating AOV growth in the back half. I mean is that the right expectation? Or is there a view that you could still be in the early innings of this AOV momentum? Rati Levesque: Thanks, Mark, for the question. I'll take the first one before I hand it over to Ajay. So on the supply side, what are we seeing? Watches, jewelry, handbags, high-value items in general, seeing strong supply coming in through there, strong inventory. Again, this is because of our retail locations, because of our incentives for the sales teams and how we've really prioritized this area. Our NPS is great for the mid- and high-value product as well. So we're seeing like all of that top-of-funnel metrics, our investment in marketing really pay off and bring in the right type of supply. The interesting thing about us is all this data that we have, right? The 15 years of proprietary data to help us leverage AI. So what that means is we have this agility to our business so we can scale up supply in the areas where customers want very quickly. And we see those trends very quickly, and we can take that out to the sales team and make sure that they're incentivized the right way. So we're not seeing any slowdown in high value. If anything, that's picked up pretty nicely, and obviously has a lot to do with how big the TAM is. But the top of the metrics are solid. And just tactically, I brought up the flywheel, but also Real Partners and affiliates. So these closet organizers, these stylists, we're really starting to see momentum there with the type of product they're bringing in that again gets -- is a mix of a really nice high and mid-value product, the agentic kind of search on the discovery side, of things selling through in a nice way, gets more money for our consignor and kind of accelerates that flywheel. Ajay Gopal: I can take the second question, Mark, around sort of AOV for the second half. I think it really goes back to this concept of balance between price and volume growth for us, right? We've seen a healthy balance between the two, and there are quarters where one tends to be a little higher than the other. When you read into our implied second half guidance, yes, we do expect the balance to shift a little bit versus Q1 to a more -- less on AOV, more on units. But really, it comes down to what the customer is looking for and where fashion preferences shift. We have the ability to quickly move in that direction. And just as you saw us capitalize on that trend with jewelry and watches, to your point last year, we'll do the same regardless of where that shifts. Operator: Your next question will come from Ashley Owens with KeyBanc. Victoria Apostolico: It's Victoria on for Ashley. Given the recent increase in oil and gas prices and the pressure we're seeing on the lower-income consumers, are you seeing any divergence in activity between higher-value customers and the more aspirational buyers on the platform? Rati Levesque: Thanks, Victoria. Yes, we're not seeing any kind of change in trend when I'm looking at the health of the consumer. Right now, like I said, the buyer and consignor continues to be resilient headed into the quarter. And I really think, again, testimony to our trust, but also, again, that intersection between value and luxury, so that dollar going a lot farther with us. The resale continues to become mainstream. And we're seeing -- as far as trends go, we talk about high-value, but also emerging brands and vintage. So we're much more now the place where people are discovering new brands as well. And if anything, we're also seeing -- because of the trust that we built and the testimony to our trust, we're seeing first-time buyers spending more in their first purchase. So that's the great thing about our marketplace. And I'd say one other thing that I'm seeing is, I'd say resale in the past was maybe one transaction. It's becoming -- it's less of a trend and a fad now and more we're developing this deeper connection with our customer. And we talk about it a lot in the metrics, right? Almost 50% of customers consider the resale value before purchasing in the primary market now and almost 60% prefer the secondary market outright. So we're seeing definitely a change in the behavior as people are changing the way they shop. Victoria Apostolico: Okay. Great. And then just concerning the consumer pressure, I was curious about how prior cycles went. Has this helped grow adoption for resale in the past? Rati Levesque: Yes. So we haven't been through like a recession, for example, a macro. I would say that we were built out of a recession. We say that quite often. The question is do people want to monetize their closet if they're feeling a little bit of pressure. Again, I don't know. But what I do know is and what I can tell you is what we're seeing right now. And supply pipeline looks really good, new consignors, new buyers. We are seeing people wanting to monetize their closet right now. We're seeing people really buy into the value play. And like I said, that intersection between value and luxury really works in our favor right now. Operator: Your next question will come from Jay Sole with UBS. Jay Sole: Hope you can hear me. My question is on just AI and operational throughput. I guess how much of the margin expansion in Q1 was driven by Athena and some of the smart sales impacted by smarter AI pricing? That's the first question. And then sort of any color on AI rollouts versus any kind of seasonal tailwinds, specifically, are you seeing a measurable decrease in time to site for unique SKUs? Ajay Gopal: Yes. Thanks for that question, Jay. I'll take the first part of it and then hand it to Rati to talk about the broader sort of AI strategy that we see on our business. As it relates to Athena, it is a pretty material component of the source of efficiency that we are seeing in operations and technology, at the end of the year with 35% of items being processed through that workflow, and we see that getting close to 50% towards the year, so -- towards the end of this year. So it will continue to be a source of efficiency for us. We also have other things we're working on within the operations line. One of our investments this year is in implementing an automated storage and retrieval system in one of our fulfillment centers, and we're excited about that because it's going to allow us to move things faster through our fulfillment centers, and it also allows us to get more out of our existing capacity footprint. So 35% more from the fulfillment center where we would be putting in this technology. So that's as it relates to what we're doing around operations in Athena. I'll turn it to Rati to talk about sort of the broader AI strategy in our business. Rati Levesque: Yes. Thanks, Jay. So I mentioned this earlier, but I think what puts us in a really great position is we have 15 years of proprietary data to position us and leverage AI. So at the end of the day, it's about removing friction, unlocking supply, lowering fixed and variable costs. Our objective is to find these efficiencies, also shorten our SLA, service level agreement with our customer, but while also taking dollars out of the unit cost. So Athena is one way that we do that, but also how do we get to 15%, 20% adjusted EBITDA margins. It's leveraging our moat, our expertise, authentication, pricing and data, our sales team. We're well positioned to kind of take advantage of these efficiencies. So examples might be smart sales, which you've heard us talk about in the past, authentication as well. An automated storage and retrieval system we're launching right now that will really help a lot of the OpEx costs. And then leveraging across our corporate functions as well. And then on the site experience side, we think about improving discovery or conversational search via agentic AI. So we're pretty excited to test and start using the agentic AI, this human agent collaboration. And it's early innings of capitalizing on the significant and growing TAM. Operator: Your next question will come from Marni Shapiro with The Retail Tracker. Marni Shapiro: Congratulations on a fantastic quarter. I'm curious, I know we love talking about technology and everything, but I'm kind of curious about the customer side of things just a little bit more. I have a couple of friends -- several friends who actually consign with you and buy with you. And a few of them have said that the experience has been a lot better. So I'm curious about what you're doing to enhance that experience on the buyer side, on the consignor side? And how is it, I guess, rolling out? And what should we expect the rest of the year? Rati Levesque: Yes. Thank you for the question. As a team and as a company, we've really been focused around obsessing over service. You hear me talk a lot about that in our script. So whether that is a pricing estimator that we've launched, reconsign, our operational excellence, really looking at kind of the exceptions and making sure that they're going down the right path. MyCloset is another one, right? Or just that deeper connection that we're -- that we have now with the consumer to build trust with our sellers, empowering them with that rich data that we have. And then search and discovery is something else that we're working on this year. So really thinking about both the consignor and seller -- sorry, the consignor and the buyer experience and really kind of listening in on what the pain points are and addressing them as a team. So still we get really excited about talking about that and how do we kind of continue to increase our NPS. The price estimator is actually launching today. There's a select group of sellers, so check that out, and we'll continue to do our hard work here. Marni Shapiro: And can I ask a follow-up on that? Because I feel like there are a lot of places to consign or try and sell your pre-loved merchandise. Are you hearing from your customers, whether it's consignors and/or buyers that the trust factor is the thing that's most important. It feels -- we all know that there's a lot of dupes out there. We all know it's hard to verify some of them. Is that the kind of the moat, I guess, that you guys have? I know it's not digital, but I feel like trust is almost more important than making it easy in a weird way. Rati Levesque: Yes. So it's definitely around our trust is really important. And the way that we kind of cement our trust is through our sales organization, our pricing and data, our expertise that we have. It's great to see growing interest in the category, but it validates that resale is not just a trend, but really here to stay and kind of cemented into the infrastructure layer of the fashion industry or marketplace. So our value props really resonate with our customer. And like I said, the IP of the sales team, the authentication and expertise and just building that trust and community, again, driven by Gen Z and mostly millennials. But we are definitely unique and really doubling down on our competitive moat here. Marni Shapiro: That's great. And also, I know this wasn't new, but amazing that Andy was wearing thrifted and pre-loved items throughout Devils Wears Prada 2. I was like, oh my God, this is just genius for you guys. So congratulations. Rati Levesque: Thank you. Ajay Gopal: Thank you. Operator: Thank you. That concludes the Q&A session and today's call. You may now disconnect. 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While we strive for our Foolish Best, there may be errors, omissions, or inaccuracies in this transcript. As with all our articles, The Motley Fool does not assume any responsibility for your use of this content, and we strongly encourage you to do your own research, including listening to the call yourself and reading the company's SEC filings. Please see our Terms and Conditions for additional details, including our Obligatory Capitalized Disclaimers of Liability. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy. RealReal (REAL) Q1 2026 Earnings Transcript was originally published by The Motley Fool

Interested in The RealReal, Inc.? Here are five stocks we like better. RealReal’s Q1 2026 results beat expectations, with GMV up 24% to $606 million and revenue up 19% to $190 million. Adjusted EBITDA rose to $13.1 million, reflecting strong margin expansion and improving operating efficiency. Management raised full-year guidance after the strong start to 2026, now targeting GMV of $2.42 billion to $2.47 billion and revenue of $770 million to $784 million. The updated outlook also calls for adjusted EBITDA of $59 million to $67 million, with continued progress toward medium-term margin goals. AI, automation, and supply expansion are central to the growth plan, including the Athena intake system, automated storage at its Perth Amboy center, and new supply channels such as stores, referrals, and international drop-ship partnerships. Executives said customer demand remains resilient despite macro concerns. Michael Burry's Alibaba Bet and the Broader Market Implications RealReal (NASDAQ:REAL) reported first-quarter 2026 results that exceeded its expectations, with management pointing to stronger buyer engagement, higher-value transactions and improving operating efficiency across the luxury resale platform. Chief Executive Officer and President Rati Levesque said the quarter marked the company’s fourth consecutive quarter of double-digit top-line growth and its third consecutive quarter of growth above 20%. She said trailing 12-month active buyers grew by double digits year over year, reflecting “higher levels of trust and an acceleration in engagement” with the platform. → Insider Sales: Top AST SpaceMobile Insider Cuts Postion Over 30% eBay Steps Aboard the AI Bandwagon with Certilogo Acquisition Levesque framed 2026 as a year of “compounding” for the company after what she described as stabilization in 2024 and optimization in 2025. She said RealReal has built a foundation in which customer relationships, data, brand and scale reinforce one another. Chief Financial Officer Ajay Gopal said first-quarter gross merchandise value rose 24% year over year to $606 million, while total revenue increased 19% to $190 million. On a two-year stacked basis, GMV was up 32%. → Light Speed Returns: Corning Cashes In on NVIDIA Growth Is This Why Mike Burry Took a Stake in The RealReal Stock? Consignment revenue grew 18% from the prior-year period, and direct revenue increased 26%. Gopal said trailing 12-month active buyers rose 10% year over year, while average order value increased 15% to $646. The company’s take rate was 36.4%, down 220 basis points year over year. Gopal attributed the decline to a favorable shift toward higher-value items, which carry a lower percentage take rate but generate more profit dollars and better unit economics. → Years in the Making, AMD’s Upside Movement Has Just Begun Gross profit increased 18% year over year to $141 million. Gross margin was 74.5%, down 50 basis points, which Gopal said was primarily driven by product mix. Operating expenses leveraged 730 basis points as a percentage of revenue, supported by operating efficiencies and volume leverage on fixed costs. Adjusted EBITDA was $13.1 million, up $9 million from the prior year, and represented 6.9% of total revenue. That marked a 430-basis-point margin expansion year over year. The company ended the quarter with $139 million in cash equivalents and restricted cash. Operating cash flow was negative $16.6 million, an $11.7 million improvement from a year earlier. RealReal raised its full-year outlook following the first-quarter performance. The company now expects: Full-year GMV: $2.42 billion to $2.47 billion, representing 14% to 16% growth year over year. Full-year revenue: $770 million to $784 million, representing 11% to 13% growth. Full-year adjusted EBITDA: $59 million to $67 million, implying an 8.1% margin at the midpoint. Gopal said the updated adjusted EBITDA outlook represents roughly 200 basis points of margin improvement versus 2025. He also reiterated that the company remains on track toward its medium-term target of 15% to 20% adjusted EBITDA margins. For the second quarter, RealReal expects GMV of $590 million to $600 million, revenue of $186 million to $189 million and adjusted EBITDA of $11 million to $12 million. At the midpoint, the adjusted EBITDA outlook implies a 6.1% margin and about 200 basis points of year-over-year margin expansion. Levesque said RealReal is focused on three strategic pillars: its growth playbook, service improvements and operational excellence. She described the company’s sales team as a competitive asset, supported by algorithmic pricing tools that provide consignors with data-driven earnings estimates. The company is also expanding referral programs through its Real Partners initiative, which works with stylists, closet organizers and real estate agents who refer clients to the platform and earn commissions. Levesque said stores remain an important supply channel, noting that sellers who engage with a store deliver 40% more value. RealReal plans to add stores in San Francisco and Boston in 2026. Levesque also cited newer supply channels, including drop ship and vendor partnerships. She said the company is building an asset-light international supply network with partners in markets such as Italy, France and Japan. In response to an analyst question, she said the international drop-ship strategy remains in “early days” and is being approached through a “crawl, walk, run” framework. Management also emphasized the growing overlap between buyers and sellers. Gopal said 43% of new consignors in the first quarter came from the active buyer base. Levesque said these customers, referred to internally as “RealRealers,” spend 50% more time with the company than the average customer. RealReal executives said artificial intelligence and automation are playing an increasing role in both the customer experience and the company’s cost structure. Levesque said the company’s AI-enabled intake system, Athena, is automating repetitive and data-driven intake work, allowing experts to focus on tasks requiring specialized judgment. She said RealReal is targeting nearly 50% of items to flow fully through Athena by the end of 2026, which is expected to improve processing times, speed to site and unit economics. The company is also using AI-powered image embedding in pricing models to account for visual product characteristics when determining market value. Levesque said this should help create better comparables and maximize earnings for consignors. Later this year, RealReal plans to roll out an automated storage and retrieval system at its Perth Amboy authentication center. Management said the system is expected to increase capacity by 35% without opening additional warehouses. In the Q&A portion of the call, Gopal said operations and technology were a significant source of operating leverage in the quarter and are expected to remain important to margin expansion. He also said that efficiency gains could be reinvested into growth areas such as marketing, product and technology, while still balancing margin improvement. Analysts asked management about macroeconomic pressures, including fuel prices and pressure on lower-income consumers. Levesque said the company is not seeing a meaningful change in buyer or consignor trends and described both groups as resilient. She said RealReal’s positioning at the intersection of value and luxury is resonating with customers. She also said resale is becoming less of a one-time transaction and more of an ongoing relationship, supported by tools such as MyCloset, Reconsign and pricing estimators. Levesque said about 50% of RealReal’s customer base is Gen Z and millennial, and she cited resale’s growing role in how consumers approach luxury purchases. She said the company’s trust, authentication expertise, pricing data and sales organization remain central to its competitive position. Asked about higher average order value, Gopal said customers have shown a willingness to buy higher-priced items on the platform, and he described the marketplace as flexible enough to respond as preferences shift across fashion categories. He said management expects a healthier balance between price and unit growth in the second half of the year. The RealReal, Inc (NASDAQ: REAL) operates an online marketplace specializing in the authenticated resale of luxury goods. Since its founding in 2011 by entrepreneur Julie Wainwright, the company has positioned itself as a leading platform for consignors and shoppers seeking designer fashion, fine jewelry, watches, art, and home décor. Headquartered in San Francisco, The RealReal combines e-commerce technology with an in-house team of experts to offer a seamless buying and selling experience for secondhand luxury items. At the core of The RealReal's business model is its consignment service, which enables individuals to sell pre-owned luxury products through a fully managed process. The article "RealReal Q1 Earnings Call Highlights" was originally published by MarketBeat. View MarketBeat's top stocks for May 2026.

Company delivered strong topline growth, improved operating cash flow, and accelerated growth in trailing 12-month Active Buyers SAN FRANCISCO, May 07, 2026 (GLOBE NEWSWIRE) -- The RealReal, Inc. (Nasdaq: REAL)—the world’s largest online marketplace for authenticated, resale luxury goods—today reported financial results for its first quarter ended March 31, 2026. First quarter 2026 gross merchandise value (GMV) and total revenue increased 24% and 19% respectively, compared to the first quarter of 2025. Consignment revenue grew 18% compared to the prior year period, and Direct Revenue grew 26% year-over-year in the first quarter. First quarter Adjusted EBITDA improved $9 million compared to the first quarter of 2025. “In Q1, we delivered another quarter of growth along with Adjusted EBITDA margin expansion as our financial results exceeded expectations: GMV was up 24% and adjusted EBITDA margin expanded over 400 basis points. The strength of our platform — our customer relationships, our data, our brand, and our scale — was on display in the first quarter,” said Rati Levesque, President and Chief Executive Officer of The RealReal. Levesque continued, "Through disciplined execution of our three strategic pillars, unlocking supply through our growth playbook, obsessing over service, and operational excellence, we are extending our leadership position in the growing luxury resale market. Our buyer growth, led by Gen Z and Millennials, reinforces that resale is a core component of the future of luxury. We are solidifying The RealReal as the operating system for luxury ownership.” First Quarter Highlights GMV was $606 million, an increase of 24% compared to the same period in 2025 Total Revenue was $190 million, an increase of 19% compared to the same period in 2025 Gross Profit was $141 million, an increase of $21 million compared to the same period in 2025 Gross Margin was 74.5%, a decrease of 50 basis points compared to the same period in 2025 Net Income was $39 million or 20.5% of total revenue, compared to $62 million or 39.0% of total revenue in the same period in 2025 Adjusted EBITDA was $13.1 million or 6.9% of total revenue compared to $4.1 million or 2.6% of total revenue in the same period in 2025 GAAP basic net income (loss) per share was $0.33 compared to $0.56 in the prior year period and GAAP diluted net loss per share was $(0.07) compared to $(0.14) in the prior year period Non-GAAP basic and diluted net loss attributable to common shareholders per share was $(0.01) compared to $(0.08) in the prior year period Top-line-related Metrics Trailing twelve months active buyer count was 1,083,000, an increase of 10% compared to the same period in 2025 Average order value (AOV) was $646, an increase of 15% versus the same period in 2025 Q2 and Full Year 2026 Guidance Based on market conditions as of May 7, 2026, we are increasing our full year guidance. Additionally, we are providing guidance for second quarter 2026 GMV, Total Revenue and Adjusted EBITDA, which is a Non-GAAP financial measure. We have not reconciled forward-looking Adjusted EBITDA to net income (loss), the most directly comparable GAAP measure, because we cannot predict with reasonable certainty the ultimate outcome of certain components of such reconciliations, including payroll tax expense on employee stock transactions, that are not within our control, or other components that may arise, without unreasonable effort. For these reasons, we are unable to assess the probable significance of the unavailable information, which could materially impact the amount of future net income (loss). Webcast and Conference Call The RealReal will host a conference call to review the company’s first quarter results beginning at approximately 2:00 p.m. Pacific Time today (5:00 p.m. Eastern Time). A live webcast of the conference call and accompanying materials will be available online at investor.therealreal.com. A replay of the webcast will be available at the same location. To access the conference call by phone, participants will need to register to obtain a dial-in phone number and an access code. Please register using this link: https://the-realreal-earnings-call-q1-2026.open-exchange.net/registration. About The RealReal, Inc. The RealReal is the world’s largest online marketplace for authenticated, resale luxury goods, trusted by more than 40 million members. Our full-service consignment model—offering virtual appointments, in-home pickup, drop-off, and direct shipping—enables consumers to buy and sell luxury across fashion, fine jewelry and watches, art, and home categories with ease. The company combines a rigorous, expert-led authentication process with proprietary technology, including AI and machine learning, to power optimal pricing and processing for our members and to help scale the business. By extending the life of millions of luxury goods, the company is leading a more circular economy, all the while delivering a seamless experience for buyers and sellers. Investor Relations Contact: [email protected] Press Contact: [email protected] Forward Looking Statements This press release contains forward-looking statements relating to, among other things, the future performance of The RealReal that are based on the company's current expectations, forecasts and assumptions and involve risks and uncertainties. In some cases, you can identify forward-looking statements by terminology such as “may,” “will,” “should,” “could,” “expect,” “plan,” anticipate,” target,” “contemplate,” “project,” “believe,” “estimate,” “predict,” “intend,” “potential,” “continue,” “ongoing” or the negative of these terms or other comparable terminology. These statements include, but are not limited to, statements about future operating and financial results, including our strategies, plans, commitments, objectives and goals, in particular in the context of the recent geopolitical events, and uncertainty surrounding macroeconomic trends, financial guidance, anticipated growth in 2026, the anticipated impact of generative AI, and medium-term goals and projections. Actual results could differ materially from those predicted or implied and reported results should not be considered as an indication of future performance. Other factors that could cause or contribute to such differences include, but are not limited to, inflation, macroeconomic uncertainty, geopolitical instability, any failure to generate a supply of consigned goods, pricing pressure on the consignment market resulting from discounting in the market for new goods, failure to efficiently and effectively operate our merchandising and fulfillment operations, labor shortages and other reasons. More information about factors that could affect the company's operating results is included under the captions “Risk Factors” and “Management's Discussion and Analysis of Financial Condition and Results of Operations” in the company's most recent Annual Report on Form 10-K for the year ended December 31, 2025 and subsequent Quarterly Reports on Form 10-Q, copies of which may be obtained by visiting the company's Investor Relations website at https://investor.therealreal.com or the SEC's website at www.sec.gov. Undue reliance should not be placed on the forward-looking statements in this press release, which are based on information available to the company on the date hereof. The company assumes no obligation to update such statements. Non-GAAP Financial Measures To supplement our unaudited and condensed financial statements presented in accordance with generally accepted accounting principles ("GAAP"), this earnings release and the accompanying tables and the related earnings conference call contain certain non-GAAP financial measures, including Adjusted EBITDA, Free Cash Flow, Adjusted EBITDA as a percentage of total revenue ("Adjusted EBITDA Margin"), non-GAAP net loss attributable to common stockholders, and non-GAAP net loss per share attributable to common stockholders, basic and diluted. We have provided a reconciliation of these non-GAAP financial measures to the most directly comparable GAAP financial measures in this earnings release. We do not, nor do we suggest that investors should, consider such non-GAAP financial measures in isolation from, or as a substitute for, financial information prepared in accordance with GAAP. Investors should also note that non-GAAP financial measures we use may not be the same non-GAAP financial measures, and may not be calculated in the same manner, as that of other companies, including other companies in our industry. Adjusted EBITDA is a key performance measure that our management uses to assess our operating performance. Because Adjusted EBITDA facilitates internal comparisons of our historical operating performance on a more consistent basis, we use this measure as an overall assessment of our performance, to evaluate the effectiveness of our business strategies and for business planning purposes. Adjusted EBITDA may not be comparable to similarly titled metrics of other companies. We calculate Adjusted EBITDA as net income (loss) before interest income, interest expense, provision (benefit) for income taxes, and depreciation and amortization, further adjusted to exclude stock-based compensation, employer payroll tax on employee stock transactions, restructuring charges, gain on extinguishment of debt, change in fair value of warrant liability and certain one-time expenses. The employer payroll tax expense related to employee stock transactions are tied to the vesting or exercise of underlying equity awards and the price of our common stock at the time of vesting, which may vary from period to period independent of the operating performance of our business. Adjusted EBITDA has certain limitations as the measure excludes the impact of certain expenses that are included in our statements of operations that are necessary to run our business and should not be considered as an alternative to net income (loss) or any other measure of financial performance calculated and presented in accordance with GAAP. In particular, the exclusion of certain expenses in calculating Adjusted EBITDA and Adjusted EBITDA Margin facilitates operating performance comparisons on a period-to-period basis and, in the case of exclusion of the impact of stock-based compensation and the related employer payroll tax on employee stock transactions, excludes an item that we do not consider to be indicative of our core operating performance. Investors should, however, understand that stock-based compensation and the related employer payroll tax will be a significant recurring expense in our business and an important part of the compensation provided to our employees. Accordingly, we believe that Adjusted EBITDA and Adjusted EBITDA Margin provide useful information to investors and others in understanding and evaluating our operating results in the same manner as our management and board of directors. Free cash flow is a non-GAAP financial measure that is calculated as net cash (used in) provided by operating activities less net cash used to purchase property and equipment and capitalized proprietary software development costs. We believe free cash flow is an important indicator of our business performance, as it measures the amount of cash we generate. Accordingly, we believe that free cash flow provides useful information to investors and others in understanding and evaluating our operating results in the same manner as our management. Non-GAAP net income (loss) per share attributable to common stockholders, basic and diluted is a non-GAAP financial measure that is calculated as GAAP net income (loss) plus stock-based compensation expense, provision (benefit) for income taxes, payroll tax expense on employee stock transactions, restructuring charges, gain on extinguishment of debt, change in fair value of warrant liability, and certain one-time items divided by weighted average shares outstanding. We believe that making these adjustments before calculating per share amounts for all periods presented provides a more meaningful comparison between our operating results from period to period. The following table reflects the reconciliation of net income to Adjusted EBITDA for each of the periods indicated (in thousands): (1) The gain on extinguishment of debt for the three months ended March 31, 2025 reflects the difference between the carrying value of the February 2025 Exchanged Notes and the fair value of the 2031 Notes. (2) The change in fair value of warrant liability for the three months ended March 31, 2026 and March 31, 2025 reflects the remeasurement of the warrants issued by the Company in connection with the 2024 Note Exchange in February 2024. A reconciliation of GAAP net income to non-GAAP net loss attributable to common stockholders, the most directly comparable GAAP financial measure, in order to calculate non-GAAP net loss attributable to common stockholders per share, basic and diluted, is as follows (in thousands, except share and per share data): The following table presents a reconciliation of net cash used in operating activities to free (negative) cash flow for each of the periods indicated (in thousands): Key Financial and Operating Metrics: